Tax Type
Retail Sales and Use Tax
Description
Newspaper printing charges; Free newspaper
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
05-22-1989
May 22, 1989
Re: §58.1-1821 Application: Sales and Use Tax
Dear******************
This will refer to your earlier correspondence with Delegate *************regarding a sales and use tax assessment issued as the result of a recent audit.
FACTS
********** (the "Taxpayer") is engaged on a weekly basis in the publication of a free newspaper. The taxpayer publishes the newspaper, but contracts out the printing of the newspaper to another party. A recent audit by the department resulted in the assessment of tax on printing charges from the printer to the newspaper. The taxpayer contests the inclusion of these charges in the audit.
DETERMINATION
Based upon the opinion of the Virginia Supreme Court in Jefferson Publishing Corporation v. State Tax Commissioner, 217 Va. 988, 234 S.E.2d 297 (1977), in the past the tax has been deemed applicable to purchases of printing by publishers of free newspapers and similar periodicals.
However, a 1983 law change extended the industrial manufacturing exemption contained in Va. Code §58.1-608(1) to "those businesses classified in codes ... 20 through 39 of the Standard Industrial Classification (SIC) Manual." Newspaper printers are included in code 27 of the SIC Manual; however, this code also includes businesses which publish but do not print newspapers.
Thus, the 1983 law change, in conjunction with the 1982 law change that extended the industrial manufacturing exemption to "equipment, printing or supplies, used directly to produce a publication (for) distribution at no cost," would exempt the taxpayer's purchases of printing from the tax. Emphasis added
The department will revise its audit of the taxpayer based upon the foregoing findings.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner